Day trading means buying and selling of financial instruments such as stocks, forex, options, future contracts, commodities and other financial securities within a trading session. This means, if you are day trading, then all your positions must be closed before the end of each trading session.
Day trading is also referred to as Intraday. The main objective of day trading is to make money out of price volatility.
The most important reason why people prefer to day trade is they require a smaller capital to make money. Anyone can day trade with a computer and an internet connection. A day trader can work from anywhere in the world.
Day trading is neither an easy nor a get rich quick scheme. Below in this article, we have listed some of the most common day trading myths in the stock market and their validity.
Day trading is a way to get rich quick
Day trading is so easy that a 10th grade student can make money.
You need to spend 15 minutes a day to go home with a lot of cash.
We have a 100% success ratio, anyone can do it. Why not you?
These types of advertisements in social media make beginners lose money quickly instead of getting rich.
As experts suggest, to day trade, you need years of practice before making money consistently.
One of the biggest day trading myths is that Day trading is a way to get rich quick. It is true that many intraday traders have made money like the big bull Rakesh Jhunjhunwala. But, for that you have to be ready to devote yourself to learning everything about trading.
Simply moving around money in a brokerage account, watching YouTube videos, following telegram channels and taking calls doesn’t make you rich. These social media influencers are either advertising for their trading programs or getting referral commission from brokerage houses for opening your accounts through them. They can’t make you rich.
You need years of practice to sharpen your day trading skills and knowledge.
Day trading is investing
Investing means you are holding capital assets like stocks, bonds, real estate and other financial instruments over a long time horizones, with a hope that your portfolio performance will outspace inflation. The return of your portfolio depend largely on the returns of your selected asset classes.
Day trading concentrates your financial interest on a single position in the next few hours or withing a trading session. Your gains and losses depends on that day’s market volatility. It does not matter in which asset class you have taken a postion and what is it’s long term return.
Intraday traders are concerned about what will happen in the next few hours. Whereas investing is long-term.
A well diversified portfolio for a long term can give you good returns irrespective of market ups and downs. In day trading, you may easily lose your capital if you don’t know what you are doing.
Day trading is a hobby
Day trading is a serious business. As a day trader you are playing with the best minds of the world. It’s not a hobby. It’s a serious business. Hobby is something we do when we are free or bored like reading novels, watching movies and learning piano. You spend money on your hobbies for entertainment.
If you have decided to day trade, then take it as a serious business.
99% traders lose money in day trading
You might have heard about one of the most common day trading myths that 99% traders lose money in day trading. No one knows the exact success rates of trading. However,most retail traders fail in intraday trading.
No doubt, Intraday trading is tough, it’s not a very easy game. One has to develop his trading skills and experience in order to achieve consistent results.
Trading is a game of probability. To get started as a day trader, you don’t need anyone’s certificate. You can start with a trading account, PC/Laptop, internet connection and money.
However, to become very good and effective in day trading, you need practice. The best way to gain expertise is through proper training.
Which day trading myths do you like the most?
